Amazon plans to invest above $5 billion in construction and alone on the new site and stated that on their site that they expect to:

“include as many as 50,000 high-paying jobs,” stating that it will be, “fully equal to our current campus in Seattle.”

With an estimated $38 billion in growth from Amazon investments between 2010 and 2016 in Seattle, it is no wonder that these cities are jostling to impress Bezos and house the new headquarters.

With the company expected to make a selection by the end of 2018, cities are tightening their proposals and crossing their fingers hoping to receive the final rose.

Amazon 2nd headquarters – What Are Amazon’s HQ2 Selection Parameters?

With 20 different cities in the running, Amazon will have to do some serious thinking about exactly what they need from their host city as well as what that city can provide more adequately than others.

First and foremost, the company is looking to find a specific site or building to house the company. Though not entirely opposed to building their own from scratch, the company is reportedly looking for existing structures that have a minimum of 500,000 square feet that are within 30 miles of a populated hub and under 45 minutes from an international airport.

Considering that the Seattle headquarters has a massive site space with just over 8 million square feet, the new HQ would have to have at least that amount if not more.

Due to this, the company is seeking tax incentives from cities to help the building and implementation of initial and ongoing business costs.

Detroit has already offered Amazon $4 billion in tax incentives, which headlines what is most likely the largest incentive package that the state of Michigan has ever given to a single company. Despite that massive offer, it seems that it will be unsuccessful. Amazon is still rumored to be looking beyond Detroit in its search at this time with states like New Jersey offering as much as $7 billion in tax incentives for their Newark location.

Another parameter that Amazon must consider lies with a properly skilled labor force. Considering the company is aiming to hire 50,000 workers almost immediately, Amazon needs to find a city with workers who are readily available and highly skilled. With this, Amazon has dug extremely deep into different education systems, prioritizing a “strong university system,” while also heavily researching the effectiveness and validity of computer science programs in K-12 educational systems. Yes, Amazon is taking this so seriously that they are concerned with Kindergarteners learning computer science.

Amazon 2nd headquarters – One parameter of explicit importance to Amazon is the company’s fit amongst whatever community it selects.

Some of the cultural criteria that Amazon is looking for includes (per Quartz Media):

In this sense, Amazon strives to find a city that provides some give and take, while they can support the community and the community can continue to support them for years to come. This is no get-rich-quick scheme in starting a new HQ. Amazon plans to set up shop in whatever city they chose and be in it for the long haul.

Amazon 2nd headquarters – Potential Drawbacks of HQ2?

While adding an additional HQ in whatever chosen city will obviously help the city’s economic growth, some residents and business owners over finalist cities have been wary of having the HQ2 in their city.

For one, nobody can tell how beneficial bringing the HQ2 to any given city will actually be. While most economic experts who have weighed in say that there will be instant and long-term benefits, cities run the risk of overestimating the benefits and offering too high of incentives.

This phenomenon is known as “winner’s curse” and was coined by famous economist Richard Thaler, who pointed out that oftentimes, oil firms who bid too much on auctions and won ended up losing money from it. This curse is even more common in sports, where players’ value, coupled with a team’s need can drive up the price and make the player’s salary an albatross.

In this manner, Amazon’s HQ2 is the best player to hit “free agency” in years, but cities (operating as teams in this analogy) should be wary of bidding too much on a player that may not provide as much impact (financially or otherwise) as they had hoped.

When this happens in sports, a franchise can suffer and may even take years to recover. However, sports franchises are able to trade players with albatross contracts, while a city cannot simply trade away a business. In this sense, whatever city Amazon chooses must be wary of overspending or over compromising themselves in a way that could come back to hurt their local economy.

For a potential business parallel to this situation, we must harken back all the way to the 1970s when Volkswagen had states compete for the first American Volkswagen factory in a similar, albeit less intense fashion. The state of Pennsylvania won the bid for the company to open a factory in Westmoreland County and contributed multiple services including tax breaks, a highway and a railroad spur for the factory and even helped screen job applicants.

However, after promising to add 20,000 jobs, the factory only housed 6,000 jobs at its peak and was shut down in 1988.

Amazon likely will not experience quite as catastrophic of results, but cities should be wary of how much return on investment they will actually get and must consider past failures by other companies with similar plans.

Amazon 2nd headquarters – How Will This Affect Sellers?

As Amazon continues to expand, sellers reap the benefits. With the opening of a new headquarters, sellers will be able to sell more items with added quickness.

Having a second headquarters with tons of storage space will allow Amazon to house more items from sellers and should theoretically help increase the speed at which they sell by virtue of being closer to more customers.

Sellers should consider the risks that are associated with the new HQ2 and should research which HQ their products will be located at while they await shipping. If sellers can make sure they have merchandise in both HQs, they will ensure their products are readily available to regional customers for quicker shipping, which could be accompanied by a rise in customer satisfaction.

Considering that Amazon aims to be intertwined in their new HQ city’s community and culture, sellers should expect an increase in buyers in the surrounding region of the city and thus should consider marketing their products to said group of people more heavily.

Sellers should carefully research the background of whatever city is chosen and consider expanding their merchandise to encompass the needs and wants of individuals in close proximity.

A second headquarters will also provide thousands of jobs to people in whatever community HQ2 pops up in. That means more exposure for Amazon and a strong customer base in the surrounding region. Sellers in that region will benefit the most from this, but all sellers around the globe should be thankful to have a larger base of customers.

In theory, it makes a lot of sense that most of the cities being looked at are around the Eastern United States. Since the original HQ is nestled in Seattle, having another HQ on the East should help Amazon’s ability to provide services for East Coast cities as well as European cities that are very far away from the West Coast.

This new HQ should also help Amazon to further implement their Prime Air delivery system that allows customers to order an item and receive it within 30 minutes by drone delivery.

In essence, the HQ2 could effectively double Amazon’s potential output and ability to implement new programs around the country.

As the company takes steps toward going from an international to a global marketplace, sellers should reap the reward as their potential customers continue to grow.

Amazon 2nd headquarters – by Cyril Zackary Penn IV.

Cyril Zackary Penn IV is a soon-to-be graduate of Hofstra University with a Journalism degree from Sonoma, California. He started his own blog in high school and has been writing about sports, news and entertainment since. Cyril Zackary Penn IV is currently a staff writer at AXcess Baseball as well as the Hofstra Chronicle and formerly was the Sports Editor at Man of the Hour Magazine.

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